PEOPLE OF THE PHILIPPINES, petitioner, vs.

THE
HONORABLE
SANDIGANBAYAN
(Fifth
Division) and EFREN L. ALAS, respondents.
DECISION
CORONA, J.:

Does the Sandiganbayan have jurisdiction over

presidents, directors or trustees, or managers of
government-owned or controlled corporations organized
and incorporated under the Corporation Code for
purposes of the provisions of RA 3019, otherwise known
as the Anti-Graft and Corrupt Practices Act? The
petitioner, represented by the Office of the Special
Prosecutor (OSP), takes the affirmative position in this
petition for certiorari under Rule 65 of the Rules of Court.
Respondent Efren L. Alas contends otherwise, together
with the respondent court.
Pursuant to a resolution dated September 30, 1999
of the Office of the Ombudsman, two separate
informations for violation of Section 3(e) of RA 3019,
otherwise known as the Anti-Graft and Corrupt Practices
Act, were filed with the Sandiganbayan on November 17,
1999 against Efren L. Alas. The charges emanated from
the alleged anomalous advertising contracts entered into
by Alas, in his capacity as President and Chief Operating
Officer of the Philippine Postal Savings Bank (PPSB),
with Bagong Buhay Publishing Company which
[1]

purportedly caused damage and prejudice to the

government.
On October 30, 2002, Alas filed a motion to quash
the informations for lack of jurisdiction, which motion was
vehemently opposed by the prosecution. After
considering the arguments of both parties, the
respondent court ruled that PPSB was a private
corporation and that its officers, particularly herein
respondent Alas, did not fall under Sandiganbayan
jurisdiction. According to the Sandiganbayan:
After a careful consideration of the arguments of the accusedmovant as well as of that of the prosecution, we are of the
considered opinion that the instant motion of the accused is
well taken. Indeed, it is the basic thrust of Republic Act as well
as (sic) Presidential Decree No. 1606 as amended by President
Decree No. 1486 and Republic Act No. 7975 and Republic Act
No. 8249 that the Sandiganbayan has jurisdiction only over
public officers unless private persons are charged with them in
the commission of the offenses.
The records disclosed that while Philippine Postal Savings
Bank is a subsidiary of the Philippine Postal Corporation
which is a government owned corporation, the same is not
created by a special law. It was organized and incorporated
under the Corporation Code which is Batas Pambansa Blg. 68.
It was registered with the Securities and Exchange
Commission under SEC No. AS094-005593 on June 22, 1994
with a lifetime of fifty (50) years. Under its Articles of

Incorporation the purpose for which said entity is formed was

primarily for business, xxx
Likewise, a scrutiny of the seven (7) secondary purposes of the
corporation points to the conclusion that it exists for business.
Obviously, it is not involved in the performance of a particular
function in the exercise of government power. Thus, its
officers and employees are not covered by the GSIS and are
under the SSS law, and actions for reinstatement and
backwages are not within the jurisdiction of the Civil Service
Commission but by the National Labor Relations Commission
(NLRC).
The Supreme Court, in the case of Trade Unions of the
Philippines and Allied Services vs. National Housing Corp.,
173 SCRA 33, held that the Civil Service now covers only
government owned or controlled corporations with original or
legislative charters, those created by an act of Congress or by
special law, and not those incorporated under and pursuant to a
general legislation. The Highest Court categorically ruled that
the Civil Service does not include government-owned or
controlled corporation which are organized as subsidiaries of
government-owned or controlled corporation under the general
corporation law.
In Philippine National Oil Company Energy Development
Corporation vs. Leogardo, 175 SCRA 26, the Supreme Court
emphasized that:
The test in determining whether a government-owned or
controlled corporation is subject to the Civil Service Law is the

manner of its creation such that government corporation

created by special charter are subject to its provision while
those incorporated under the general corporation law are not
within its coverage.
Likewise in Davao City Water District vs. Civil Service
Commission, 201 SCRA 601 it was held that by governmentowned or controlled corporation with original charter we mean
government-owned or controlled corporation created by a
special law and not under the Corporation Code of the
Philippines while in Llenes vs. Dicdican, et al., 260 SCRA
207, a public officer has been ruled, as a person whose duties
involve the exercise of discretion in the performance of the
function of government.
Clearly, on the basis of the foregoing pronouncements of the
Supreme Court, the accused herein cannot be considered a
public officer. Thus, this Court may not exercise jurisdiction
over his act.
[2]

Dissatisfied, the People, through the Office of the

Special Prosecutor (OSP), filed this petition arguing, in
essence, that the PPSB was a government-owned or
controlled corporation as the term was defined under
Section 2(13) of the Administrative Code of 1987.
Likewise, in further defining the jurisdiction of the
Sandiganbayan, RA 8249 did not make a distinction as
to the manner of creation of the government-owned or
controlled corporations for their officers to fall under its
jurisdiction. Hence, being President and Chief Operating
Officer of the PPSB at the time of commission of the
[3]

[4]

crimes charged, respondent Alas came under the

jurisdiction of the Sandiganbayan.

the exercise and discharge of their respective powers, functions

and responsibilities with respect to such corporations.

Quoting at length from the assailed resolution dated

February 15, 2001, respondent Alas, on the other hand,
practically reiterated the pronouncements made by the
respondent court in support of his conclusion that the
PPSB was not created by special law, hence, its officers
did not fall within the jurisdiction of the Sandiganbayan.

From the foregoing, PPSB fits the bill as a

government-owned or controlled corporation, and
organized and incorporated under the Corporation Code
as a subsidiary of the Philippine Postal Corporation
(PHILPOST). More than 99% of the authorized capital
stock of PPSB belongs to the government while the rest
is nominally held by its incorporators who are/were
themselves officers of PHILPOST. The creation of PPSB
was expressly sanctioned by Section 32 of RA 7354,
otherwise known as the Postal Service Act of 1992, for
purposes of, among others, to encourage and promote
the virtue of thrift and the habit of savings among the
general public, especially the youth and the marginalized
sector in the countryside xxx and to facilitate postal
service by receiving collections and making payments,
including postal money orders.

[5]

We find merit in the petition.

Section 2(13) of EO 292 defines government-owned
or controlled corporations as follows:
[6]

Sec. 2. General Terms Defined Unless the specific words of

the text or the context as a whole or a particular statute, shall
require a different meaning:
xxx xxx xxx
(13) government owned or controlled corporations refer to any
agency organized as a stock or non-stock corporation vested
with functions relating to public needs whether governmental
or proprietary in nature, and owned by the government directly
or indirectly or through its instrumentalities either wholly, or
where applicable as in the case of stock corporations to the
extent of at least 51% of its capital stock: provided, that
government owned or controlled corporations maybe further
categorized by the department of the budget, the civil service
commission and the commission on audit for the purpose of

[7]

It is not disputed that the Sandiganbayan has

jurisdiction over presidents, directors or trustees, or
managers
of
government-owned
or
controlled
corporations with original charters whenever charges of
graft and corruption are involved. However, a question
arises whether the Sandiganbayan has jurisdiction over
the same officers in government-owned or controlled
corporations organized and incorporated under the
Corporation Code in view of the delimitation provided for
in Article IX-B Section 2(1) of the 1987 Constitution
which states that:

SEC. 2. (1) The Civil Service embraces all branches,

subdivisions, instrumentalities, and agencies of the
government, including government-owned or controlled
corporations with original charters.
It should be pointed out however, that the jurisdiction
of the Sandiganbayan is separate and distinct from the
Civil Service Commission. The same is governed by
Article XI, Section 4 of the 1987 Constitution which
provides that the present anti-graft court known as the
Sandiganbayan shall continue to function and exercise
its jurisdiction as now or hereafter may be provided by
law. This provision, in effect, retained the jurisdiction of
the anti-graft court as defined under Article XIII, Section
5 of the 1973 Constitution which mandated its creation,
thus:
Sec. 5. The Batasang Pambansa shall create a special court, to
be known as Sandiganbayan, which shall have jurisdiction
over criminal and civil cases involving graft and corrupt
practices and such other offense committed by public officers
and employees, including those in government-owned or
controlled corporations, in relation to their office as may be
determined by law. (Italics ours)
On March 30, 1995, Congress, pursuant to its
authority vested under the 1987 Constitution, enacted
RA 7975 maintaining
the
jurisdiction
of
the
Sandiganbayan over presidents, directors or trustees, or
managers
of
government-owned
or
controlled
corporations without any distinction whatsoever.
[8]

Thereafter, on February 5, 1997, Congress enacted RA

8249 which preserved the subject provision:
[9]

Section 4, Jurisdiction. The Sandiganbayan shall exercise

exclusive original jurisdiction in all cases involving:
a. Violations of Republic Act No. 3019, as amended,
otherwise known as the Anti-Graft and Corrupt
Practices Act, Republic Act No. 1379, and
Chapter II, Section, Title VII, Book II of the
Revised Penal Code, where one or more of the
accused are officials occupying the following
positions in the government, whether in a
permanent, acting or interim capacity, at the time
of the commission of the offense,
(1) Officials of the executive branch
occupying the positions of regional director, and
higher, otherwise classified as grade 27 and higher,
of the Compensation and Position Classification
Act of 1989 (Republic Act No. 6758) specifically
including:
xxx xxx xxx
(g) Presidents, directors or trustees,
or managers of government-owned or
controlled corporations, state universities
or educational institutions or foundations.
(Italics ours)

The legislature, in mandating the inclusion of

presidents, directors or trustees, or managers of
government-owned or controlled corporations within the
jurisdiction of the Sandiganbayan, has consistently
refrained from making any distinction with respect to the
manner of their creation.
The deliberate omission, in our view, clearly reveals
the intention of the legislature to include the presidents,
directors or trustees, or managers of both types of
corporations within the jurisdiction of the Sandiganbayan
whenever they are involved in graft and corruption. Had
it been otherwise, it could have simply made the
necessary distinction. But it did not.
It is a basic principle of statutory construction that
when the law does not distinguish, we should not
distinguish. Ubi lex non distinguit nec nos distinguere
debemos. Corollarily, Article XI Section 12 of the 1987
Constitution, on the jurisdiction of the Ombudsman (the
governments prosecutory arm against persons charged
with graft and corruption), includes officers and
employees of government-owned or controlled
corporations, likewise without any distinction.
In Quimpo v. Tanodbayan, this Court, already
mindful of the pertinent provisions of the 1987
Constitution, ruled that the concerned officers of
government-owned or controlled corporations, whether
created by special law or formed under the Corporation
Code, come under the jurisdiction of the Sandiganbayan
[10]

for purposes of the provisions of the Anti-Graft and

Corrupt Practices Act. Otherwise, as we emphasized
therein, a major policy of Government, which is to
eradicate, or at the very least minimize, the graft and
corruption that has permeated the fabric of the public
service like a malignant social cancer, would be seriously
undermined. In fact, Section 1 of the Anti-Graft and
Corrupt Practices Act embodies this policy of the
government, that is, to repress certain acts not only of
public officers but also of private persons constituting
graft or corrupt practices or which may lead thereto.
The foregoing pronouncement has not outlived its
usefulness. On the contrary, it has become even more
relevant today due to the rampant cases of graft and
corruption that erode the peoples faith in government.
For indeed, a government-owned or controlled
corporation can conceivably create as many subsidiary
corporations under the Corporation Code as it might
wish, use public funds, disclaim public accountability and
escape the liabilities and responsibilities provided by law.
By including the concerned officers of governmentowned or controlled corporations organized and
incorporated under the Corporation Code within the
jurisdiction of the Sandiganbayan, the legislature
evidently seeks to avoid just that.
WHEREFORE, in view of the foregoing, the petition
is hereby GRANTED and the assailed resolution dated
February 15, 2001 of the respondent court is hereby
REVERSED and SET ASIDE.

SO ORDERED.